Deutsche Bank Lowers Novartis to Hold After Second Clinical Setback

Deutsche Bank has downgraded Novartis to Hold from Buy and cut its price target from 140 to 120 Swiss francs, attributing the shift to a second clinical disappointment within a short span and growing concerns over the company’s deal-making record.

Analyst Emmanuel Papadakis explained that the rating action was prompted by del-desiran’s failure in a rare neuromuscular condition known as DM1, which followed a separate setback for pelacarsen. Although del-desiran carries less commercial weight than pelacarsen, Papadakis characterized it as the first tangible result from the $12 billion Avidity acquisition in 2025 and said it continues a sequence of demanding deal-return outcomes.

Papadakis argued that the setback creates an unfilled gap heading toward the early 2030s, when Novartis will face patent expirations across Cosentyx, Kisqali and Kesimpta. The failure caused shares to plunge over 10% on Tuesday, a reaction he called 'somewhat severe' given that aggregate net estimate changes from recent results may be neutral. He also projects a favorable outcome for the last significant 2026 catalyst: remibrutinib in hidradenitis suppurativa.

Nevertheless, Papadakis sees little room for meaningful upside at Novartis’s prevailing valuation of roughly 14 times estimated 2027 earnings. Drawing a parallel to Rhapsido, he observed that the impending launch of ianalumab for Sjögren’s disease will probably be sluggish, that 2027 offers scant major data catalysts, and that additional corporate-development risk has now emerged.